The natural gas futures market sent mixed signals Tuesday as the April contract failed to record a new low for the larger down move, but still declined overall for the day. The prompt-month contract put in a low of $4.476 before finishing out Tuesday’s regular session at $4.516, down 1.1 cents from Monday’s close.

Despite the lack of any real movement on the day, most traders — in assessing the charts and fundamentals — still feel the market is headed lower.

“The natural gas futures market was a real snoozefest on Tuesday, but I think traders are taking stock of things and plotting their next moves,” said a Washington, DC-based broker. “This thing still looks like it wants to go lower, but it is going to take its time. We really haven’t been able to hold the rally, so now we are seeing a slow grind down.”

The broker noted that the market is currently running counter to its normal routine this time of year. “As we’re entering the shoulder season, this is a time we should normally be rallying…but we aren’t,” she told NGI. “With the temperatures getting warmer, the degree-day bounce is gone. I don’t see a whole lot out there to support us now.”

Both the futures bulls and bears received some support Tuesday with the Energy Information Administration’s (EIA) release of the agency’s Short-Term Energy Outlook for March (see related story). The EIA said that while the number of working gas rigs has been rising in response to prices in the spot and forward markets, the agency “still anticipates a decline in 2010 production because of the lag time arising from low drilling rates last year and steep decline rates associated with newly drilled wells.”

However, the EIA did leave an out for the bears, noting that continued “recovery of drilling rig activity, increasing drilling efficiency and the potential for high production rates from shale gas wells could lead to higher-than-expected production this year and next.”

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